India pioneering pro-poor innovation

Making do with less in goods manufacturing and services has long been an accepted and inescapable reality in India. Although rates have come down, one in five Indians still lived below the poverty line in 2012 (270 million). To serve this mass of consumers at the bottom of the pyramid, India’s quality goods and services need to be affordable. This reality has inspired Indian companies to invest in what is known as frugal innovation, or frugal engineering.

‘Improvisation – better known by its Hindi equivalent of jugaad – has always been a way of getting things done in India’, observes the UNESCO Science Report (2015). Today, this frugal form of innovation is serving markets previously ignored by traditional innovation. India has not only become a hub for frugal creations, it is also codifying them then exporting them to the West.

Many frugal creations in India run independently of the power grid, making them attractive options for rural populations. Godrej’s portable top-loading refrigerator, for example, has a capacity of 35 litres, runs on batteries and is priced at about US$ 70. The Chotukool refrigerator can be used in villages to store fruit, vegetables and milk. In order to diffuse the technology, the manufacturer, Godrej, has joined forces with India Post. There are unconfirmed reports of 100 000 pieces having been sold in the first two years of production.

VNL Limited has developed a GSM base station which enables people in rural areas to use mobile phones. The World Global System for Mobile Communications (WorldGSM™) is the first commercially viable GSM system independent of the power grid. It runs exclusively on solar power and requires no backup from a diesel generator. It has also been designed for simple delivery and deployment by local, untrained workers.

The Indian company First Energy claimed to have about 5000 customers in 2014 for its alternative home-cooking fuel and stove, marketed under the name of Oorja. This product combines a micro-gasification device or stove with a biomass-based pellet fuel.

Gramateller is billed as being the lowest power-consuming automatic teller machine (ATM) on the market. This solar-power based distributor of banknotes has been developed jointly by the Indian company Vortex and the Madras Indian Institute of Technology. Leading banks such as the State Bank of India, HDFC and Axis Bank have all adopted Vortex-designed and manufactured ATMs to service their rural customers.

How frugal is too frugal?

Not all frugal goods have met with the same market success. Tata’s micro-car, the Nano, for instance, is one of the most celebrated examples of frugal innovation but it has experienced declining sales since the car was launched in 2009 at a cost of about US$ 2 000. After peaking at 74 521 in 2011–2012, sales dropped to 53 847 the following year then to just 21 130 in 2013–2014.

The UNESCO Science Report suggests that the removal of key features ‘may explain the poor sales of the first Nano car. The latest model, the Nano Twist, comes with a number of features found in more expensive models, such as an electric power-assisted steering system’.

Frugal services

Frugal services do not involve research and development, or at least not of a sophisticated nature. They may simply innovate in the way the supply chain is organized. They may also be very location-specific and as such not replicable elsewhere. For instance, the celebrated Mumbai Dabbawalas (lunch box delivery service in Mumbai) has never spread to other Indian cities, observes the report, despite being considered an efficient process for managing the supply chain.

Frugal services in India are often health-related. The Arvind Eye Care System provides large-scale, cheap eye surgery. In 2012 and 2013, hospitals performed a total of 371 893 surgical acts. There are also low-cost maternity hospitals run by Life Spring which provide quality health care at 30–40% of the market price. In 2015, Life Spring was operating 12 hospitals in the city of Hyderabad, with plans to expand to other cities.

There are also frugal financial services. Eko brings branchless banking services to the person in the street by leveraging existing retail shops, telecom connectivity and banking infrastructure. Eko also partners with institutions to offer payment, cash collection and disbursal services. Customers use a low-cost mobile phone to make their transactions. They can walk up to any Eko counter (retail outlet) to open a savings account, deposit and withdraw cash from the account, send money to any part of the country, receive money from any part of the world, buy mobile talk-time or pay for a host of services.

An appeal that stretches beyond the borders of India

Although frugal innovation is spread across a range of manufacturing and service industries, most of the products transferred to the West have been medical devices. Scientists and engineers at the University of Stanford in the USA were quick to spot their potential. This led to the establishment of the Stanford–India Biodesign Project (SIBDP) in 2007. This programme has since spawned a number of entrepreneurs whose innovative medical devices have low production costs.

Foreign multinationals have been quick to recognize the potential market appeal of frugal innovation. General Electric has developed a 1.3 kg portable electrocardiogram machine (GE MAC 400) which it manufactures in India at a cost of about US$ 1 500, compared to a cost of US$ 10 000 for the heavier version, which weighs about 6.8kg. Encouraged by the product's early market success, General Electric has decided to export this technology to its parent firm in the USA.

For one thing, technology-based start-ups need greater access to venture capital. In this regard, the UNESCO Science Report finds it ‘promising that the union government’s budget for 2014–2015 proposes setting up a fund of RS 100 billion (circa US$ 1.3 billion) to catalyse private equity, quasi-equity, soft loans and other risk capital for start-ups’.

Also of note is that the President’s Office of India began organizing an annual Festival of Innovation in 2015 which has become a national celebration of creativity and innovation at the grassroots level. In March 2017, 50 young inventors took home an award. Universities are also encouraged to compete with one another in the visitors’ award category. The winners then get a chance to demonstrate their invention to scientists, policy-makers, entrepreneurs and the public at large. The annual festival is organized with the support of the National Innovation Foundation, Honey Bee Network, Society for Research and Initiatives for Sustainable Technologies and Institutions and Gujarat Grassroots Innovation Network. UNESCO has also been supporting this annual festival. It is currently in the process of reviewing its own strategy with regard to inclusive innovation.